Based on an exploratory study of 138 firms this study analyzes the development within the field of Knowledge Management (KM) in Danish SMEs in the manufacturing industry. It is proposed that Danish SMEs do not (yet) have formalized knowledge structures, knowledge cultures, knowledge strategies, or knowledge systems in place. Hence, there could well be a large unexploited pool of knowledge assets in the SMEs. Empirical results verify the above propositions and suggestions to build or improve a knowledge process within the SME context are offered. The results of the study lead to challenges within different areas of KM that Danish SMEs face in the quest to stay competitive. Finally, the perspectives and the practical implications of a management orientation that can leverage knowledge advances and improve the types of knowledge that best fit innovative efforts and competitive strategies are also discussed.